CBRE facilitates first part of huge MOB monetization

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Cardwell building
The Cardwell Professional Building in Lufkin, Texas, was among 26 properties in the first tranche.

CBRE Group Inc. announcedthe closing of the first tranche of a multistate, 52-building medical office portfolio on behalf of Colorado-based Catholic Health Initiatives for $324 million. In total, the portfolio, which is expected to close in its entirety by year-end, is valued at approximately $700 million.

According to Real Capital Analytics Inc.’s Medical Office Building data, which began tracking the medical office sector in 2001, the sale of the full portfolio will mark the largest health system monetization of MOBs on record. Historical data also confirms it will be the largest MOB portfolio to ever trade outside of a merger or acquisition.

The CHI portfolio totals more than 3.1 million rentable square feet across 10 states. Milwaukee-based Physicians Realty Trust was selected as the buyer and is purchasing the assets in multiple phases. Chris Bodnar and Lee Asher, executive vice presidents and co-founders of CBRE’s U.S. Healthcare Capital Markets Group, and Tim Lorman, Alliance director of CBRE’s Healthcare Services Group, led the transaction on behalf of CHI.

“Like many health systems, Catholic Health Initiatives is taking advantage of favorable market conditions to unlock the capital they have invested in these properties,” said Bodnar. “This monetization of assets will strengthen operations and enhance the care they provide to the communities they serve.”

“This initiative is part of an overarching strategy by Catholic Health Initiatives to obtain maximum value from their owned and leased real estate assets, while creating a partnership with a reputable investor,” added Asher. “Physicians Realty Trust plans to own the properties for the long-term, infusing significant capital into the portfolio while providing first-class management services to CHI and their physicians.”

Based in Englewood, CHI is a nonprofit, faith-based health system formed in 1996 through the consolidation of four Catholic health systems. As one of the nation’s largest health systems, CHI operates 105 hospitals in 19 states with inpatient and outpatient facilities spanning community health-services organizations, accredited nursing colleges and home-health agencies.

Colorado properties that were part of first tranche in the portfolio include:

  • Dacono Neighborhood Health, 3101 Summit View Drive, Dacono;
  • Peak One ASC, 350 Peak One Drive, Frisco, and
  • Thornton Neighborhood Health Center, 4075 E. 128th Avenue, Thornton.
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